The astonishing fall from grace of an 87-year-old economic kingpin

The Age

3 days ago

'He wasn't perfect, but he has been stitched up because he wouldn't go when people wanted him to go,' one person close to the organisation told The Telegraph.
Other insiders fear that the push to remove Schwab will come at too high a reputational cost to the WEF itself. 'They've used a sledgehammer to crack a nut,' one said.
It is an astonishing fall from grace from the former executive chairman, who was awarded an honorary knighthood by the UK in 2006.
The German-born professor built his empire from humble beginnings, establishing the WEF in 1971 as a forum for policymakers and CEOs to discuss global issues.
Over the years it mutated into a magnet for world leaders, a capital of fevered dealmaking, a byword for elitism and a lightning rod for conspiracy theories.
The title of his book The Great Reset – about how the pandemic could remake global economies – has become shorthand for online extremists convinced that plots to create a world government are hatched at Davos.
Schwab, the quintessential 'Davos Man,' was front and centre every year as he welcomed a galaxy of heads of state and government.
They included prime ministers and presidents as different as Angela Merkel and Donald Trump, Emmanuel Macron and Narendra Modi or Baroness May and Vladimir Putin.
At this year's gathering, in January, there was no Sir Keir Starmer, French president or German chancellor in Davos.
The demise of Davos has often been predicted, but rivals are circling. China has the Boao Forum, colloquially known as 'the Asian Davos', and Saudi Arabia has launched the Future Investment Initiative, which is dubbed 'Davos in the Desert'.
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The rumblings of what would become an avalanche of revelations about Schwab began with a 2024 investigation by the Wall Street Journal, which accused the WEF of having a workplace culture that was hostile to black people and women.
Women were allegedly sidelined after becoming pregnant, while two staff members used the n-word, according to the Journal. The WEF said at the time it had zero tolerance for discrimination and harassment and disputed the allegations in the newspaper report.
Staff alleged that Schwab was inappropriate and made unwanted suggestive remarks, while one female staffer claimed he put his leg on her desk with his crotch in front of her face. She said Schwab told her he wished she was Hawaiian because he'd like to see her in Hawaiian costume, which the WEF fiercely denied.
Others told the Wall Street Journal that attractive women were chosen to meet international delegates.
There was a slang term for such encounters – 'white on blue action' – a reference to the different coloured lanyards worn at the conference by officials and famous guests.
Former staff at the non-profit were reported to have set up a WhatsApp group called 'WEFugees' in which they shared horror stories about their experiences.
A former staffer told the Journal: 'We promote inclusion and improving the state of the world and women's issues but do the opposite.'
Schwab complained bitterly about the Journal 's reporting but was determined to craft a graceful, prolonged exit from the WEF, which generates about $US00 million a year.
The WEF's founding bylaws state 'the Founder himself designates his successor', and stipulates he or 'at least one member of his immediate family' is on the board of trustees.
Schwab's plan was to move to a role as non-executive chairman and retire in stages, picking his successor.
But then whistleblowers sent a letter in an email to WEF trustees, including luminaries such Al Gore, the former US vice-president, and cellist Yo Yo Maa.
It accused Schwab and his wife, Hilde, of misusing WEF funds. It said Schwab had used company funds to pay for private massages, and he had redirected WEF resources and staff in a vainglorious bid to get nominated for the Nobel Peace Prize.
'This was not a WEF initiative, but a self-driven effort disguised as organisational work,' the letter said.
It complained about Hilde Schwab's spending of about $USUS50 million on Villa Mundi, a mansion next to WEF headquarters overlooking Lake Geneva.
It alleged she controlled access to the property and that one entire floor was reserved for the couple's exclusive use, according to the Wall Street Journal. They denied the allegations.
In April this year, a WEF audit committee recommended opening an independent investigation into the new allegations.
Schwab went on the attack. He wrote a furious email to the committee demanding the probe be dropped within 24 hours and threatened to file a criminal complaint.
The gamble backfired.
After the WEF board insisted the investigation had to go ahead, Schwab resigned 48 hours after sending his email.
He insisted his legacy was 'well established', adding he had received 'the highest national distinction from numerous countries for my efforts in helping economic developments, reconciliation efforts and even avoiding a war'.
After a two-hour emergency meeting of trustees, Schwab's ouster was announced on April 21. He was swiftly replaced by Peter Brabeck-Letmathe, the WEF's vice-chairman and former Nestle CEO.
A law-firm led independent investigation began in accordance with Swiss regulations.
Last Sunday, some preliminary findings were published in Switzerland's SonntagsZeitung newspaper.
Law firm Homburger has looked into some £836,000 in expenses submitted by Schwab and his wife which, it was reported, were not sufficiently linked to WEF activities.
Schwab sent suggestive emails and had 'embarrassing interactions' with younger WEF staff, according to the leaked findings.
The newspaper revealed he had told staff that the UK 'must not see any improvement' in the WEF's annual Global Competitiveness Report, which ranks countries on productivity.
Otherwise it would be 'exploited by the Brexit camp', he wrote.
In the 2017/2018 report, the UK's ranking improved from seventh to fourth after a change in methodology.
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The final report published in 2017 – a year after the Brexit referendum – showed the UK had dropped one place to eighth.
It was not the only example of political manipulation of research, according to the newspaper.
Schwab has denied all the allegations.